Charts: Trading View
(Italics: Previous Analysis)
Europe’s single currency staged an impressive rebound against its US counterpart on Thursday. US equities also rose, with the US Dollar Index (USDX) exploring lower territory, consequently underpinning the EUR/USD (0.9 per cent).
Technically, we’re at an interesting juncture on the higher timeframes. In a market decisively trending lower since 2021, weekly Quasimodo support-turned resistance at $1.0778 is being tested. Though on the other side of the fence, price action on the daily timeframe rebounded from support at $1.0638. This places light on an ascending support-turned resistance, drawn from the low $1.0340. Also of particular relevance on the daily chart is the relative strength index (RSI) retesting (and holding) its 50.00 centreline, echoing the possibility of support.
Out of the lower timeframes, H4 price rebounded from supply-turned demand from $1.0655-1.0632, alongside the H1 timeframe rebounded from a bullish AB=CD formation which dovetailed with a Quasimodo resistance-turned support at $1.0631 as well as a number of nearby Fibonacci ratios. Overhead, H4 resistance is at $1.0758 and H1 resistance can be seen at $1.0762.
With weekly resistance ($1.0778) active, as well as the trend clearly favouring lower prices, and H1/H4 price nearing resistance at $1.0762-1.0758, a bearish scene could unfold from the noted lower timeframe resistances in upcoming sessions.
Upbeat risk sentiment and limited USD demand boosted appeal for the Australian dollar on Thursday. AUD/USD ended the session 1.3 per cent higher, on track to record a third consecutive weekly advance. Daily Quasimodo support-turned resistance at $0.7245 welcomed price action, a level benefitting from the 200-day simple moving average at $0.7256 (dynamic resistance). Upstream calls attention towards Fibonacci resistance between $0.7364 and $0.7322. Of note on the daily scale, of course, is the relative strength index (RSI) cementing position north of its 50.00 centreline (positive momentum).
For those who read recent technical writing you may recall the following, covering weekly structure:
Recent weeks observed AUD/USD establish a lower low (breaching 28th Jan $0.6968 low) and subsequently fashion a 2-week recovery (3.2 per cent). While an extended pullback is on the table, this remains a sellers’ market in observance of a clear downtrend since August 2011 (check monthly scale) and weekly flow topping out at $0.8007 in early February 2021. Weekly support structure remains seen between $0.6632 and $0.6764, comprised a 100% Fibonacci projection, a price support, and a 50% retracement.
Lower on the curve, H4 price is finding some grip above resistance at $0.7246 (now possible support), with subsequent interest to the upside shining light on H4 channel resistance, drawn from the high $0.7041, followed by H4 resistance at $0.7349. Lower, demand is seen from $0.7147-0.7204. On the H1, upside has 5th May $0.7266 as resistance after running above $0.72.
With daily resistance active at $0.7245 in addition to the 200-day simple moving average, together with H1 price closing in on $0.7266, H4 sellers could make a show from channel resistance, extended from the high $0.7041.
Upside momentum slowed on Thursday and ended the session largely muted. This follows back-to-back dominant days for the USD/JPY. With that, here’s where we left the higher timeframes in recent studies:
Leaving weekly support from ¥125.54 unopposed, USD/JPY trades 2.4 per cent higher on the week and threatens to refresh multi-year pinnacles. We also clearly remain entrenched within a primary bull trend, though daily price is now on the doorstep of reconnecting with supply at ¥131.93-131.10. Aiding the bullish picture is the daily timeframe’s relative strength index (RSI) strongly rebounding from 40.00-50.00 support (an area representing an oversold zone since May 2021).
Coming from the H4 timeframe, price is retesting a Quasimodo resistance-turned support at ¥129.67. Respecting the aforesaid level unlocks the path to H4 Quasimodo resistance at ¥130.58. In conjunction with the H4 base, H1 crossed swords with demand at ¥129.21-129.55, though remains south of ¥130, as of writing.
Overall, this remains a buyers’ market, with short-term flow likely to pull north of ¥130 and target H4 Quasimodo resistance at ¥130.58.
Fibonacci support between $1.2451 and $1.2471 served short-term flow well on Thursday, permitting H1 players to clear $1.25 in early Europe amid improved risk appetite. Subsequent price movement dethroned H1 resistance at $1.2554, echoing possible support in upcoming trade and drew light towards $1.26. Nestled above the noted psychological level is H4 resistance between $1.2686 and $1.2614, made up of a number of technical resistances.
Meanwhile on the bigger picture, this market has been entrenched within a strong primary downtrend since early 2021, emphasising weekly resistance at $1.2719 and daily Quasimodo support-turned resistance at $1.2762 as a possible ceiling. Interestingly, the daily timeframe’s relative strength index (RSI) is attempting to find acceptance above the 50.00 centreline: positive momentum.
As a result of current analysis, higher timeframe resistance resides between $1.2762 and $1.2719. Though on the lower timeframes, a whipsaw above $1.26 into H4 resistance ($1.2686-1.2614) could emerge and encourage a short-term bearish phase.
H1 Quasimodo resistance-turned support from $29,885 embraced price action on Thursday, withstanding a number of downside attempts. $30,485-30,861 warrants attention overhead, as does the $31,000 psychological barrier. Ultimately, direction is favoured to the downside, according to the current trend direction (facing southbound since November 2021 [primary bear trend]).
Therefore, traders are likely to note the H1 timeframe’s resistance at $30,485-30,861, as well as resistance at $31,000 in upcoming trading.
Longer term, daily support remains in the spotlight at $28,849. A breach of this barrier could clear the river to as far south as the $20,000 region.
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